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BHP Faces Music on Shale

General discussions of the systemic, societal and civilisational effects of depletion.

BHP changing its tune on shale boom

Unread postby dashster » Mon 02 Mar 2015, 00:18:43

BHP Billiton is sounding decidedly downbeat

In post-results briefings this week, both chief executive Andrew Mackenzie and his Houston-based oil and gas boss Tim Cutt declared the US shale oil boom would be “short-lived”, something the mining and oil giant had not previously posited.
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Re: BHP changing its tune on shale boom

Unread postby dashster » Mon 02 Mar 2015, 06:59:18

U.S. Oil Growth to Peak in Next Decade, Says BHP Executive

Mr. Cutt said the growth in U.S. supply would flatten in the next three to six months as other shale producers slow down their work.

“I think you’re going to see us and others slow down when the price is low and speed up when the price is up,” he said.

Mr. Cutt said some of its shale plays in the U.S. remained profitable, returning up to 20% margins, though those were lower than earlier profits.



BHP tips US oil growth to peak soon

The US's role as a so-called world swing oil producer won't last long as its petroleum growth will peak sometime in the next decade and then go into decline, BHP Billiton's chief for oil and gas production has said.
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Re: BHP changing its tune on shale boom

Unread postby ROCKMAN » Mon 02 Mar 2015, 09:12:09

“I think you’re going to see us and others slow down when the price is low and speed up when the price is up.” Makes you wonder how many $millions/yr he gets paid for such brilliant insights, doesn't it? Maybe next he’ll tell us the secret to making money in the stock market: buy low…sell high. LOL

Be prepared to hear a lot of odd statements from the oil patch corporate “leadership”: unable to admit the reality of the situation out loud they are still obligated to make comments.
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Re: BHP changing its tune on shale boom

Unread postby rockdoc123 » Mon 02 Mar 2015, 13:56:07

“I think you’re going to see us and others slow down when the price is low and speed up when the price is up.” Makes you wonder how many $millions/yr he gets paid for such brilliant insights, doesn't it? Maybe next he’ll tell us the secret to making money in the stock market: buy low…sell high. LOL


might have been a misquote but I suspect the point he is making is that the shale plays are somewhat unique in that once price rises you can accelerate development very quickly, much moreso than a lot of the conventional plays. They are more vulnerable to dropping price due to high costs but they are also able to recover very quickly when the price rises.
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Re: BHP changing its tune on shale boom

Unread postby Outcast_Searcher » Mon 02 Mar 2015, 14:32:31

ROCKMAN wrote:“I think you’re going to see us and others slow down when the price is low and speed up when the price is up.” Makes you wonder how many $millions/yr he gets paid for such brilliant insights, doesn't it? Maybe next he’ll tell us the secret to making money in the stock market: buy low…sell high. LOL

Be prepared to hear a lot of odd statements from the oil patch corporate “leadership”: unable to admit the reality of the situation out loud they are still obligated to make comments.

It seems to me he's merely stating the obvious about any economic venture. Sadly, such obvious things must be constantly pointed out to:

1). Doomers -- since generally only bad economic news (or that that they insist is bad) makes it through their filter.
2). The far left, since they insist money is for redistribution to "the poor" and don't worry much about where it comes from -- except to track it for maximum possible taxation.

Funny how with such a screwed up system all economic problems are the, in the eyes of the far left, the fault of the producers and, as always, the 1%. Because of course, incentives have nothing to do with economic production (triple facepalm).

Doubly funny how the plight of the "poor" is then cast by the same far left as not enough incentive provided by the mean old job creators who expect actual value from the labor they employ. But of course, that gets glossed over as the key word of blame is always "greed".
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: BHP changing its tune on shale boom

Unread postby dashster » Tue 03 Mar 2015, 01:50:53

Doubly funny how the plight of the "poor" is then cast by the same far left as not enough incentive provided by the mean old job creators who expect actual value from the labor they employ. But of course, that gets glossed over as the key word of blame is always "greed".


I see job creation or destruction as a macro-economic event, not a micro-economic event. That is, if some rich guy opens a store it doesn't create jobs, and if a rich guy closes a store it doesn't destroy jobs. The money that flows to or flows away from that store will go elsewhere and affect hiring or lack of hiring at other businesses. What matters is how much money is flowing to all stores versus current wages. When money supply goes up, jobs are "created", when it goes down, jobs are destroyed, as long as wages don't drop or rise at the same amount. The concern is (money supply/wage rates).

One thing with regard to the plight of the poor is that the far left and far right are both insink with regard to something that damages the poor - endless immigration. This country can never have enough workers according to the elite who benefit from the supply/demand imbalance in their favor, and the far left never challenges as the elite have successfully made economic migration into a sacred and holy cow that is unchallengable, particularly in light of the fact that the economic migrants are almost exclusively non-white.
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Re: BHP changing its tune on shale boom

Unread postby DesuMaiden » Fri 06 Mar 2015, 15:50:42

rockdoc123 wrote:might have been a misquote but I suspect the point he is making is that the shale plays are somewhat unique in that once price rises you can accelerate development very quickly, much moreso than a lot of the conventional plays. They are more vulnerable to dropping price due to high costs but they are also able to recover very quickly when the price rises.

And when the price of oil goes up by too much, shale oil production is also cut because overall demand of oil is destroyed when the price of oil is too high. Demand vs supply economics are funny because the supply side (not the demand side) always wins in the end. That's because no matter how much demand there is for a certain product, if there isn't enough supply, then the demand will be cut down by extreme price increases.

And when the price of oil goes up beyond a certain level than obviously the economy suffers. While not all economic recessions are tied with price spikes in oil, all price spikes in oil have caused economic recessions.

The bumpy plateau has been described by many peak oil researchers, and it is actually happening right now. The price of oil goes up until it becomes too high to be affordable to most people. And this causes the demand for oil to go down, which also brings down the price. But as soon as the price goes down to a sufficient level, this will fuel more demand for oil, which will only drive up the price of oil again because there is finite amount of oil left. Nothing can change that. This will shut down the economy again because of the rising energy costs and the finiteness of oil.

And this bumpy plateau lasts for a decade or two until we fall off of the cliff. That is when the price of oil spikes again, and no one can afford to buy that oil. And everything will just shut down, which will cause the collapse of industrial civilization.

We are right on the bumpy plateau of oil prices meaning oil prices will keep on going up and down. The collapse is only a decade or two away. That is when oil becomes unaffordable to virtually everyone, and the economy, agriculture and everything will just shut down.
History repeats itself. Just everytime with different characters and players.
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BHP Faces Music on Shale

Unread postby Tanada » Fri 15 Jan 2016, 15:49:09

Nice little report to fill your eager eyes with, if you like doomy stuff. More text and some nifty graphs at the link below the quote.

BHP Billiton Ltd. said it expects to take a writedown of $4.9 billion on the value of its U.S. shale assets due to the tumble in oil prices. Its next safeguard against the commodities collapse may be to abandon its decade-old pledge to maintain or raise its dividend. The stock slumped to the lowest in 10 years in London.

The Melbourne-based producer, the biggest overseas investor in U.S. shale, is cutting capital expenditure and seeking other savings as it grapples with the slide in prices of metals and energy, and the costs of November’s deadly dam breach at its iron ore venture in Brazil. Iron ore, the company’s top earner, has slipped more than three-quarters since its 2011 peak, while oil this month plunged below $30 a barrel for the first time in 12 years.

BHP’s post-tax charge against its U.S. onshore assets, acquired for $20 billion in 2011, is part of a rolling response to the slump in raw materials, which this week has seen rival miner Rio Tinto Group freeze wages for 2016 and Japanese trading house Sumitomo Corp. take a charge of around $650 million against its nickel project in Madagascar.

“In what’s probably a protracted period of lower commodity prices, there’s this writedown and probably other writedowns to come elsewhere in the portfolio,” Tim Schroeders, a Melbourne-based portfolio manager at Pengana Capital Ltd., said by phone. “They are getting close to having to come clean on the progressive dividend.” Schroeders helps oversee about $1 billion in equities, including BHP shares.

BHP will cut its dividend payment by half to 31 U.S. cents in the six months to Dec. 31, according to Bloomberg Dividend Forecasts.

“At the moment, the biggest concern they have is can they fund their dividend, can they fund their capex plans?” Citigroup Inc. analyst Clarke Wilkins said by phone from Sydney. BHP is likely to trim both its dividend and project spending when it announces half-year results next month, he said.

BHP will balance its commitment to a strong balance sheet and maintaining its credit rating as it considers the dividend payout, Chairman Jac Nasser told investors at an annual meeting in Perth in November. The company declined to comment Friday on the prospect of any change to its dividend.

The writedown on its U.S. shale assets would extend to about $8.7 billion the post-tax charges BHP has booked against the operations in Arkansas, Louisiana and Texas. The new impairment will reduce the value of the business to about $16 billion, BHP said Friday in a statement.


http://www.bloomberg.com/news/articles/ ... ale-assets
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